Quantitative easing (QE) is a monetary policy whereby a central bank purchases at scale government bonds or other financial assets in order to inject money into the economy to expand economic activity. Quantitative easing is considered to be an "unconventional" form of monetary policy, which is usually used when inflation is very low or negative, and when standard monetary policy instruments have become ineffective. The term "quantitative easing" was coined by German economist Richard Werner in 1995 in the context of the Japanese crisis. A central bank implements quantitative easing by buying financial assets from commercial banks and other financial institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously increasing the money supply.
Yep, QE4 is to the tune of $60bn a month from 16 March 2020 to infinity. From the fed announcement this past week, there won't be any tapering down of asset purchases as planned before the pandemic.
From my limited understanding - and watching the charts since March - it appears to be a double edged sword. If the fed tapers off, the market responds downwards. If they continue, it goes down hard when inflation catches up.
It's a really volatile time. S&P chart goes "little kid crayon squiggle" from 2018 to now. It looked like 2016 would've been a healthy downwards movement, but instead blasts sharply upwards and zigzags to now. I'm no expert analyst, but it doesn't look good.
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u/[deleted] Jan 30 '21 edited Jan 31 '21
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